By Adedapo Adesanya
Start-ups in Africa raised more than $1.3 billion in the first quarter of the year, including exits, preliminary data from Africa: The Big Deal shows.
The latest data published by the duo of Max Cuveiller and Maxime Bayen showed that startups on the continent also recorded their best performances in the quarter since mid-2022, when they faced several headwinds.
In the three months of the year, February 2023 was the continent’s third-best month ever in terms of funding, as they raised $700 million after September 2021 and March 2022.
Meanwhile, March 2023 was the worst month in more than two years since August 2020. It was also the first time the monthly amount of funding raised by start-ups in Africa dipped below the $100 million mark since 2020, as only $66 million was raised.
January was lifted by InstaDeep’s acquisition by BioNTech made history in January as the German-based biotech company lapped up the Tunis-born and U.K.-based artificial intelligence (AI) startup for up to $680 million.
Regardless, Q1 2023 dropped 29 per cent compared to the same period in 2022, or a 52 per cent drop excluding exits.
In Q1 2022, startups on the continent recorded a total of $1.8 million in funding, while the second quarter saw companies get $1.3 billion, leading to a strong performance in the first six months of the year.
However, this new development show that this may not be possible. The number of $100k+ deals also dropped as a little of over 150 deals were recorded in the first three months of this, less than half the Q1 2022 tally (300+), a trend last witnessed in 2020 due to COVID-19.
With the recent collapse of Silicon Valley Bank (SVB), analysts and market observers expect that the trend of slow funding will continue.
Already, venture capital companies such as Quona Capital, EchoVC, Future Africa, Ajim Capital, Volition Capital, and 4DX Ventures had funds in the bank; nonetheless, several of these companies expressed confidence that they would continue banking with SVB, which was later rescued by the US government.
Chipper Cash which helps handle cross-border payments for consumers in five African nations, as well as the US and the United Kingdom, including crypto trading, announced that the failure of SVB has affected them, with reports flying of a potential sale.
Modupe Gbadeyanka